The Existential Economist and Interest Rates

Here is an exchange I had this morning with someone I will only identify as the existential economist.

EE:

Fed will use this jobs report (+295k jobs) to justify raising rates.

Despite average wage growth falling.

Jesse:

They want to get off zero so that they can cut later on when they fail again.  Even if it is only 'symbolic.'  I would almost guarantee that this is their game plan.

I wonder if they will increase the rate that they pay the Banks on their excess reserves that the Fed provides? That could be another motivation.  They *could* play that a bit. Or maybe using rates to drive investors into riskier assets is just for the little people, and they could just use it to increase the Banks' share in their vigorish.

Aren't we cynical?  Maybe.  Maybe not enough.

I do not see the Fed doing anything to help anyone except to help the Banks belly up closer to an ever widening trough of economic distortions, inequality, and malinvestments.

NAV Premiums of Certain Precious Metal Trusts and Funds

Yes it certainly is a Non-Farm Jobs Payrolls day.

Apparently if you stack low paying part time jobs high enough it means something.

The dollar took off on the 'blowout' jobs number. With the rest of the world in the process of cutting interest rates, the US looks to be getting ready to raise rates, which is certainly boosting the DX index, which is most heavily weighted to the euro.

One thing I have never seen before to my memory is the negative estimate I have on the Sprott Silver Trust's cash position. Keeping in mind of course that this is my estimate based on what numbers they do publish.  And it could be wrong.  But if it is, it is not for a lack on trying to find out.

I believe they have several options to resolve this, but they do not seem to be in any hurry to share this information with their unit holders.  And it doesn't appear to be for any lack of Sprott spokespersons who are available to give their opinions on so many other things.

As I reminder, I recommend nothing to anyone, ever.  I am not in a professional position to do so.  I am actively watching macro-economic developments, and then putting out my own analysis and theories about what is happening and why.  And this does involve watching individual sectors and representative firms.

I am watching these particular trust and funds because they are closed end and publish some timely statistics, meaning that there is a way to track their variance to Net Asset Value.  And they offer a useful cross section of redeemable, non-redeemable, and a mix of gold and silver.  I do not track any open ended funds designed to track the price of an underlying commodity.  Some people do.

Everyone's individual financial position is unique, requiring much more information than a public blog will have.  I put what I know and what I think out there, and people may make their own best judgements.

I bring this up now because people have a tendency to take full credit for all their successes, but their failures are orphans at best.   Sometimes people will ask for my 'opinion' on some particular notion they have, and they provide so little meaningful personal information in their request that it is obvious that they have already made up their minds, but just want to tag someone else with the decision.  It if wins, they are a genius, if it is wrong, they ought not to have listened to that other guy.

And while I have occasionally done it, I no longer like to even disclose what specific positions I may be holding because I do not wish people to 'follow' my own investing or trading, even at a distance.  That is no way to do it.  My circumstances and objectives may be entirely inappropriate for yours.

Leverage, risk and portfolio theory.  If you do not understand them, you ought not to be investing on your own.  And in general I think that in this market no amateurs should be actively trading because the probability that they will lose money is exceptionally high for the reasons I have stated many times.

 

Gold Daily and Silver Weekly Charts - Walkabout

"The world is ours, we are its lords, and ours it shall remain. As for the host of labor, it has been in the dirt since history began, and I read history aright. And in the dirt it shall remain so long as I and mine and those that come after us have the power.

There is the word. It is the king of words—Power. Not God, not Mammon, but Power. Pour it over your tongue till it tingles with it. Power.”

Jack London, The Iron Heel

At the devil's booth are all things sold. Each ounce of dross, costs its ounce of gold.

James Russell Lowell

 The price action in dross was the usual thing for the bucket shop today.

 

One thing that was a bit surprising is that a good chunk of the Comex deliverable gold went walkabout.    Where it went, I am sure no one can say.  

 

Considering that this is an inactive month, and the gold clearing report continues to be a snoratorium, the big withdrawal of 114,790 ounces of gold out of Scotia Mocatta was a bit of a surprise.

 

There was a lesser withdrawal of 3,890 ounces from HSBC.

 

Silver had the usual ins and outs.

 

Non-Farm Payrolls tomorrow.

 

Have a pleasant evening.

 

 

 

 

SP 500 and NDX Futures Daily Charts - Killing Floor Blues

"We have sort of become a nation of whiners. You just hear this constant whining, complaining about a loss of competitiveness, America in decline despite a major export boom that is the primary reason that growth continues in the economy."

Phil Gramm, 11 July 2008

"Charles Munger, the billionaire vice chairman of Berkshire Hathaway Inc., defended the U.S. financial-company rescues of 2008 and told students that people in economic distress should 'suck it in and cope.'"

Bloomberg, Sept 20, 2010

 

There is no recovery.

 

There has been no genuine reform.

 

There is another asset bubble.

 

The careless few are doing very well, and do not care.

 

Have a pleasant evening.

 

 

 

 

Images Caricaturée du Jour

The first cartoon is from William Banzai.

I am not worthy.

And the second was sent my way, artistic origins unknown.

 

 

 

 

Gold Daily and Silver Weekly Charts - Justice For Some - Currency Wars - ECB Deposit Rates To -3%

Via Bloomberg, citing Handelsblatt:

Eurozone on road to deflation, and bonds remain [an] attractive asset because high demand meets scarce supply

ECB will reduce interest for cash deposits to minus 3% and the dollar [will] appreciate by 20%, reaching parity with euro in 2015.

This evening Zerohedge reports that there is speculation that the ECB will cut interest rates paid to MINUS THREE PERCENT, and that the intention is to bring the dollar 20% higher to dollar parity.  That should do wonders for The Recovery.™

 

Currency wars.   And your meager savings and wages will be the cannon fodder.

 

This is not official, but it makes a great headline and a vector of things to come.  Maybe JPM is trying to make us feel better about their plans for charging us a single percent to hold our cash, ex fees.  Or maybe they are just snorting the ketamine of their own moral hazard, and riding the buzz into a k-hole.

 

This is hard to believe. 

 

But it is also hard to believe that the Fed slipped a back door bailout in the trillions to the Banks.  Nothing is as stupid as the bureaucratic desperation of the pampered princes, when they see the long awaited day of reckoning coming across the horizon.  So I am keeping an open mind.

 

An interest rate on savings deposits of negative three percent is a euphemism for the confiscation of the middle class' remaining funds.  The one percent are parked in subsidized rentier assets and tax havens.

 

These jokers are jumping up and down on a land mine, just to see what happens.

 

Silver continues to be the more interesting story for now in March, with the delivery notices continuing, although the warehouse inventories are more than adequate.

 

Gold is inactive this month, at least in the Comex bucket shop precincts.  Asia is another story.

 

How interesting were the markets today?  I apparently have some Greek heritage on my paternal great grandmother's side, via Italy.  Bohemia and Austria, with Prussia on the maternal side, I knew about, but not the Greek.  Yo, Demetrios.

 

That was how interesting the markets were today. I spent the afternoon perusing the old census records and family papers. 

 

This market is t - h - i - n, and heavily gamed by the bots.

 

The Department of Justice report on law enforcement in Ferguson, Missouri was released today, and it was interesting.   The report shows that Ferguson systematically used its law enforcement responsibilities to turn a minority, African Americans, into an ongoing revenue stream.

 

When you read this damning report, keep in mind that this abusive use of the law may be where the financial system is heading in its relationship with the ninety nine percent, with rents, fees, penalties, usurious loans and student debts, rigged markets, and of course, an unequal system of justice for some.

 

Non-farm payrolls on Friday.  This is an inactive month for gold.

 

I am continuing to watch the Sprott Silver fund to see what they do about their cash situation for expenses.   They have several options.  I do not know all of them, or which one they may pursue.

  

Currency wars, bitchez. 

 

And almost no one is talking about it.   Or the corrosive role of the Banks.

 

In 1999, on signing Gramm-Leach-Bliley into law, Clinton said, “This is a day we can celebrate as an American day” and that ” the Glass-Steagall law is no longer appropriate for the economy in which we live” and “today what we are doing is modernizing the financial services industry, tearing down these antiquated laws and granting banks significant new authority” and “This is a very good day for the United States.”

Columbia Journalism Review, Bill Clinton on Deregulation

Have a pleasant evening.